Global Ethylene Prices Witness a Bullish Trend Amidst Improved Downstream Demand

Global Ethylene Prices Witness a Bullish Trend Amidst Improved Downstream Demand

Global Ethylene Prices Witness a Bullish Trend Amidst Improved Downstream Demand

  • 06-Feb-2023 5:31 PM
  • Journalist: Li Hua

Ethylene prices have gained upward momentum across the global markets during the first week of February 2023. The primary factor for the unexpected price rise was the improved demand dynamics and limited inventory levels in the respective market. However, inflation and manufacturing activity has expanded in the European market.

In the Chinese market, Ethylene prices have increased marginally since the conclusion of the Lunar New year holidays as market participants replenished the material available in the domestic market. Several traders reported "definite" demand pull from the downstream industries. In terms of domestic production, operating rates have improved in China for the first time since the last quarter as demand has enhanced in the domestic market. Meanwhile, Naphtha prices have increased this week, resulting in the high production cost of Ethylene. Hence, prices of Ethylene were settled at USD 780/MT on 3rd February 2023.

Similarly, consumption from downstream polyethylene and other competitive industries has improved in the South Korean market, thus increasing the demand pressure on Ethylene. In addition, major manufacturer Hyundai Chemical in Daesan, South Korea, which has a capacity of 850,000 MT/year, shut down their Ethylene plant on 31st January due to maintenance turnaround. Currently, there is limited to no influence on the shutdown. Though, prolonged stoppage may alter supply dynamics in the coming quarter.

On the other hand, Ethylene prices rose sharply in the European market, backed by the high-cost pressure from feedstock Naphtha prices. Demand from downstream packaging and other industries has increased substantially owing to improved buying sentiments in the region. According to ifo, the Business climate index rose from 88.6 points to 90.2 points in January. Moreover, market participants reported inflation is seen at 6%, a drop in 2023 from the previous estimation, as energy prices ease after the initial shock of the energy crisis ignited by the Ukraine war. In conclusion, prices of Ethylene in Germany were offered at USD 1010/MT on an FD Hamburg basis with a weekly increment of USD 130/MT during the week ending 3rd February 2023.

Similarly, in Saudi Arabia, Ethylene prices strengthened due to intensified buying sentiments from domestic and international markets. In addition, the Saudi Industrial investment group has stated that the unscheduled maintenance works in its subsidiary, Saudi Polymers Co., are still in progress as the mechanical repairs necessitate further stoppage to ensure safe and reliable operations. Further, the finical impact of the unplanned shutdown cannot be concluded at present amid variations in the product prices and ambiguity of the stoppage. Thus, Ethylene FOB Al Jubail prices were assessed at USD 874/MT during the same time frame.

According to ChemAnalyst, "Global Ethylene prices are anticipated to gain upward momentum in coming weeks due to further hope of enhancing demand from the end-user industries. Meanwhile, feedstock Naphtha prices are supposed to rise, which may positively impact Ethylene prices. Meanwhile, in Saudi Arabia, the effect of the temporary shutdown will be shown in SIIG's Q1 2023 result".


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